What you need to know

Salary increases may be slightly more difficult to obtain in 2024. The labor market has been easing somewhat recently. Even though unemployment remains low, new job growth is slowing. And employers may tighten their purse strings.

According to December 2023 data from the Mercer QuickPulseTM – American Compensation Plan Survey, U.S. employers plan to increase their salary increase budgets by an average of 3.8% for total compensation increases and 3.5% for performance-based pay increases. The average budget for total compensation increases is down slightly from 3.9% at the beginning of the year. However, in certain industries and for people moving up the ranks, the likelihood of a pay increase may be higher.

What does the 2024 pay rise mean? Let’s take a look at some surprising statistics about the current salary growth landscape and how you can increase your salary and improve your personal finances.

A Mercer survey found that employers plan to promote about 10% of their workforce in 2024. Half of employers have an existing salary and wages budget or common expense process they use to cover pay increases for promotions.

Here’s what the 2024 pay rise means. Getting promoted is not rare, impossible, or unprecedented! Many people work hard every day and deserve the opportunity to advance. Nationally, about one in 10 workers can expect a promotion in 2024, and 50% of employers already have promotions built into their budgets. Don’t assume your company can’t afford to promote you or give you a raise. It’s part of the cost of doing business, and companies plan for it.

According to a Mercer study, the average salary increase for a one-level promotion is expected to be 9.2%. For example, if your current salary is $60,000 per year and you get an average promotion, you should expect your new salary after promotion (and pay increase) to be approximately $65,520.

Here’s what the 2024 pay rise means. If you’re taking on additional responsibilities, filling in for absent colleagues, and generally holding the universe together at your company, 2024 could be a good time to ask your manager for a promotion. Ask for bigger pay raises, new positions, and other benefits you need to move up the company. Remember: 9.2% is just the average pay increase for a promotion. Some people may get more than that.

3. 50% of employers were planning non-cyclical pay increases in 2023.

In a typical year as an employee in many companies and organizations, you will receive annual performance reviews and annual salary increases. Salary increases are determined by your performance at work, your employer’s business practices, global economic and industry conditions, and your department’s budget.

However, when the job market is strong, as it will be in 2022 and 2023, companies are anxious about losing good talent to other employers. And they may be more likely to offer “non-cyclical” pay increases, that is, pay increases that occur outside of the normal annual review period. A Mercer survey found that nearly 50% of employers plan to offer (or have already offered) off-cycle pay increases in 2023. The top reasons employers offer off-cycle pay increases include:

internal equity

Employers are concerned about pay equity and making sure people are paid fairly within the company. Avoid underpaying teams or individuals by mistake (or due to potentially unlawful acts of discrimination). Sometimes, off-cycle pay increases occur within an organization to rebalance the scale and provide fairer pay for everyone.

market correction

As the job market changes, some employees and skill sets have become more valuable. If a company discovers that its biggest competitor is raising salaries by 8% for all employees in a particular job, this means that a 4% pay increase is no longer enough. Employers often adjust salary offers throughout the year as necessary to retain an appropriate workforce with in-demand skills.

retention issues

Due to talent shortages and ‘resignation’ over the past few years, companies are concerned about retaining their top performers. If you’re good at your job and your skills are in demand, the company doesn’t want you to quit. You have the option of getting hired by another company or organization, and your boss knows it.

Here’s what the 2024 pay rise means. Smart employers constantly try to think ahead in order to retain good talent – to ensure that their top performers are happy and working hard at the company. Retention bonuses and off-cycle pay increases could be part of the 2024 salary increase.

conclusion

Don’t assume that you don’t deserve a bigger raise or that your employer can’t afford to pay you more. Despite global economic uncertainty, many employers are planning significant pay increases in 2024. Your manager and organization may value you more than you think. And in today’s strong job market, employees have more power than they think. Don’t give up that power. Have warm and open conversations with your boss. Demand what you deserve, stand up for yourself, and show how you can add value and exceed expectations. By 2024, you’re more likely to see a big pay rise and more money in your bank account.

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